Does age matter when getting a mortgage?

Can you get a mortgage and buy a house at the age of 18? What about 68? Does age matter when getting a mortgage? The simple answer is that age discrimination in lending is prohibited. However, real life is a bit more nuanced.

How young can you be to get a mortgage?

If you’re of legal age in your state, you can sign a contract and apply for a mortgage. In most states, the “age of majority” is 18. It’s 21 in Mississippi and 19 in Alabama and Nebraska.

There are exceptions. A minor may buy a house if:

The minor is legally emancipated, which is a court-ordered process that enables a minor to sign ownership and mortgage agreements. Of course, lender approval would be required.
The property is held in a trust or under joint ownership. Under this legal structure, an adult executes the contract on behalf of the minor with the property placed in a trust or jointly held.

That’s the legal minimum age factor in play. Of course, a borrower, regardless of age, must qualify financially for a mortgage, which includes proof of steady income, an acceptable credit history, and the down payment required for the loan they are applying for.

How old can you be and still get a mortgage?

Now to the other end of the scale: First of all, home buyers are getting older. The median age for a home buyer is 59, according to the National Association of Realtors. First-time home buyers are averaging 40 years old.

But is there an age limit?

No, not in a legal sense. A lender will consider a borrower’s source of repayment, whether it’s income from a job, an investment, a retirement account, or other assets (see “Asset depletion loans” below). Even Social Security payments count as income.

Research shows loan denial and interest rates increase with age

Now, here’s where the real-life nuances come in. Remember, age discrimination in lending is prohibited. However, loan denials increase significantly among those aged 70 and older, according to a 2023 study by the Federal Reserve Bank of Philadelphia. Reasons can include:

Mortality risk: While lenders can’t decline an application based on life expectancy, they do consider the risk of loan default or foreclosure that may arise from a loan guarantor’s death.
Declining income and savings: As borrowers age, income often declines or, at the very least, becomes harder to verify. In addition, retirement savings are often drawn down, reducing net worth.
Lack of collateral: In this instance, it’s most directly related to the loan-to-value. The Philadelphia Fed study noted that for elderly borrowers, particularly those refinancing mortgages, the appraised value of the home may be too low for the requested loan amount. “An inability to maintain one’s property may be a contributing factor,” the study added.

Regardless of the reason, “it is important for older individuals to know that they are more likely to be denied credit,” the Fed concluded.

Asset depletion loans

Using investments to back a mortgage is known as an “asset depletion loan.” Freddie Mac, the government-sanctioned company that helps fund mortgages, offers guidelines for structuring such loans. The assets can be held in a retirement, investment, or deposit account, in a living trust, or from the sale of a business. Other restrictions also apply.

A calculation that divides the eligible assets by 240 determines the borrower’s debt-to-income ratio.

One type of mortgage does have an age restriction

There is one mortgage with strict age guidelines: the Home Equity Conversion Mortgage, also known as a reverse mortgage. Designed for borrowers 62 and over, a reverse mortgage requires no monthly payment. The equity in the home is paid to the owner as a lump sum or monthly payments.